Books: A Power unto Themselves

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What was the Rothschilds' secret? Commercial genius and intermarriage. Rothschilds married Rothschilds; first cousins wed first cousins; and in one case an uncle took his niece as his bride. The 19th century was ignorant of the genetic risks--and in that respect, as in others, the Rothschilds were lucky. Close breeding kept the fortune cohesive. It ensured a unity of decision making and cooperation among the family's five great banking houses--the world's first multinational, with offices in London, Paris, Frankfurt, Vienna and Naples.

The family's story is handsomely told in The House of Rothschild: Money's Prophets, 1798-1848 (Viking; 648 pages; $34.95), the first volume of a chronicle by Oxford historian Niall Ferguson. The second volume is scheduled for next year.

In the Frankfurt ghetto where the fortune started, the paterfamilias, onetime coin dealer Mayer Amschel Rothschild, left a last commandment to his five sons: Maintain absolute unity. In later years the brothers quarreled often but obeyed their father. They wrote to one another voluminously in the privacy of almost indecipherable Judendeutsch (German written in Hebrew characters) and bailed one another out. Hard times for James in Paris brought Nathan's London to the rescue, and so on--meaning that the Rothschilds, a power unto themselves, could usually float above the fates of individual nations and regimes.

As the Rothschilds rose in their astonishing trajectory in the first half of the 19th century--inventing the international bond market, financing Europe's nations through wars and revolutions and the construction of their railway systems, growing to become the largest bank in the world (a dominance maintained until 1914)--they functioned as a free-lance supranational force. They passed along diplomatic intelligence for Metternich, for example, through their own communications network.

Great fortune and power breed myths and demonizations. The Rothschilds were called, with admiration and loathing, "the Kings of the Jews and the Jews of the Kings"--sometime pariahs and masters of the universe. The bright version of the Rothschilds--benefactors of progress, multilingual cosmopolitans, patrons of the arts, sponsors of Rossini and Balzac, vintners of Mouton and Lafite--was shadowed by a vicious anti-Semitic twin, the view that culminated in Hitler's speeches about "the rapacity of a Rothschild." The family became an all-purpose and surreal villain. Karl Marx vilified the Rothschilds as a quintessence of capitalist evil. One contemporary conspiracy theorist argued that the Rothschilds "arranged the murder of President Lincoln" and, later on, financed the rise of Hitler as a bulwark against the Soviet Union.

Ferguson has had access to all the surviving Rothschild archives, including the family's vast private correspondence, which fills 135 boxes. He sorts through the intricacies of their business deals: financing governments, bill brokering, working the international bullion market, trading in American cotton and tobacco, Spanish mercury and Russian copper. The legerdemain of speculative finance in another century is sometimes occult material, but Ferguson manages it well.